Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from one to 20 years.

The changes in carrying amounts of goodwill for the nine months ended September 30, 2020 are as follows (in thousands):


	Fax and Martech		Voice, Backup, Security and CPP		Total Cloud Services		Digital Media		Consolidated
Balance as of January 1, 2020	$	397,788	$	480,084	$	877,872	$	755,161	$	1,633,033
Goodwill acquired (Note 4)	21,950		—		21,950		1,867		23,817
Goodwill written off related to sale of a business (1)	—		(4,751)		(4,751)		—		(4,751)
Purchase accounting adjustments (2)	—		(2,130)		(2,130)		9,721		7,591
Foreign exchange translation	2,226		(358)		1,868		(12)		1,856
Balance as of September 30, 2020	$	421,964	$	472,845	$	894,809	$	766,737	$	1,661,546

(1) On August 31, 2020, in a cash transaction, the Company sold certain of its Voice assets in Australia and New Zealand which resulted in $4.8 million of goodwill being written off in connection with this sale (see Note 6 - Assets Held for Sale).

(2) Purchase accounting adjustments relate to measurement period adjustments to goodwill in connection with prior business acquisitions (see Note 4 - Business Acquisitions).

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of September 30, 2020 and December 31, 2019 as follows (in thousands):


	September 30, 2020		December 31, 2019
Trade names	$	27,417	$	27,379
Other	4,317		4,306
Total	$	31,734	$	31,685

Intangible Assets Subject to Amortization:

As of September 30, 2020, intangible assets subject to amortization relate primarily to the following (in thousands):


	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.1 years	$	193,701	$	94,259	$	99,442
Patent and patent licenses	5.5 years	67,949		66,805		1,144
Customer relationships (1)	8.5 years	630,768		440,079		190,689
Other purchased intangibles	4.4 years	383,555		246,998		136,557
Total		$	1,275,973	$	848,141	$	427,832

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace at which the asset’s benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first 4 to 5 years, despite the overall life of the asset.

As of December 31, 2019, intangible assets subject to amortization relate primarily to the following (in thousands):


	Weighted-Average Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	10.2 years	$	193,202	$	82,552	$	110,650
Patent and patent licenses	6.5 years	67,921		63,143		4,778
Customer relationships (1)	8.5 years	630,730		392,228		238,502
Other purchased intangibles	4.3 years	383,195		212,257		170,938
Total		$	1,275,048	$	750,180	$	524,868

Amortization expense, included in general and administrative expense, approximated $41.2 million and $50.4 million for the three months ended September 30, 2020 and 2019, respectively, and $115.6 million and $132.2 million for the nine months ended September 30, 2020 and 2019, respectively. Amortization expense is estimated to approximate $41.9 million, $114.4 million, $68.7 million, $65.2 million and $34.3 million for the remaining three months of fiscal year 2020 through fiscal year 2024, respectively, and $103.4 million thereafter through the duration of the amortization period.